Opinion piece
Are bots ready to be bankers?
By Simon Cadbury
Director of Strategy & Innovation
Intelligent Environments
Introduction
Imagine that you could contact your bank and get through straight away, without
proving who you are or listening to a menu of options, and without ever being
told that “all of our operators are busy right now”.
Imagine too that you always get through to the same personal banker, instantly.
And it doesn’t matter if you’re picking up the phone, typing into WhatsApp
or speaking to Siri, your personal banker knows it’s you, has perfect recall of
everything you’ve ever spoken about and has learned to predict your wants and
needs so well that they know them almost before you do.
Imagine that your interactions with your bank were woven so tightly into the
fabric of your daily life in your apps, digital wallets, maps, calendars, personal
assistants and messaging apps that your bank starts to become invisible - you
don’t ever need to talk to the bank’s branch staff or even visit its website.
Imagine in other words that robots, bots for short, are bankers.
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Meet the chat bot
Chat bots are intelligent computer programs that can take part in meaningful
conversations with people. They’re often designed to simulate the way that
humans converse and using technologies like AI (Artificial Intelligence) and
Natural Language Processing they can learn from us, interpret what we want and
respond in a way that is natural and appealing.
In 1950, Alan Turing anticipated the rise of AI with his “Turing test”. It imagined
a conversation between a computer and human and declared that if the human
couldn’t tell if they were talking to a computer then it must be exhibiting
intelligent behaviour.
The Turing test was declared “passed for the first time” in 2014.
That awkward moment you
don’t know if you’re chatting
with a real person or a chat bot
Why chat?
Chat and instant messaging is incredibly popular - about 2.5 billion of us have
at least one messaging app installed on our smartphones and on average we’re
spending 20 minutes more on messaging each day than on social networks. Live
chat also has the highest satisfaction levels for any customer service channel at
nearly 75%.
Instant messaging is also the perfect format for companies testing the waters
with bots and Artificial Intelligence because conversations are relatively simple
and quite structured.
The next few years is likely to see a boom in the use of chat bots in commerce
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and Gartner predicts that by 2020 autonomous software agents will participate in 5%
of all economic transactions.i
Bank of America Merrill Lynch believes that the market value for artificial
intelligence-based systems will hit $70 billion by 2020ii with IDC predicting the
banking and retail sectors to be the biggest investors.iii
Bots in business
Tech giants Google, Apple, Facebook, Amazon and Microsoft have all opened up their
platforms to third-party chat bot services and bots are already at the core of some
companies’ business models.
In China consumers can talk to chat bots on WeChat ready to take on a myriad of
tasks from booking a doctor’s appointment (and the cab to take them there) to
ordering a coffee or paying a water bill. Bots on Facebook’s Messenger will happily
arrange your Uber ride, connect you to over 100,000 doctors via HealthTap or order
your dinner from Pizza Hut.
Unfortunately, some of the most effective bot deployments seen so far have also
been the most disturbing.
Research by Wired magazine concluded that during the recent US presidential
election about 20% of tweets were generated by bots that were spreading “rumours,
conspiracy theories or misinformation ... and having their tweets retweeted by
thousands of humans”iv. Their output could easily have been mistaken for grass roots
support and may even have influenced voter turnout in some areas.
And remember Ashley Madison, the website for would-be adulterers that was
hacked in 2015? Research conducted after the hack revealed that most of the site’s
female customers were actually bots. Ashley Madison’s 70,000 fake females was
so successful at stringing along male customers that 80% of initial purchases were
made by men trying to communicate with one of its bots.v
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Bots for banks
The last few years have seen a step change in the sophistication and scale of bot use
across the financial services industry.
Virtual agents that use natural language processing and machine learning to
understand and answer customers’ questions have begun to appear with RBS,
NatWest and the Swedish SEB banking group all deploying bots based on IBM’s Watson
technology.
Deploying these AI bots creates a number of opportunities:
1. Banks want a presence in the communication channels their customers
prefer but providing the kind of instant response that users expect can
be difficult. It takes companies about 10 hours to respond to a Facebook
private messagevi but bots can give users an instant answer.
2.
Being present in the channels that customers already occupy makes life easier
for them; they don’t have to open separate apps or launch new windows to
carry about routine tasks like making payments or checking balances.
3.
Chat bots can reduce the cost/income ratio in the same way that automated
support systems have reduced call centre costs. Bots don’t require a salary,
paid time off or health insurance and they’re available to deal with multiple
customers simultaneously, 24 hours a day.
4.
Although deploying bots might allow financial services companies to reduce
their head counts they can also free up valuable human staff for more complex
work.
Financial services companies are applying AI in intelligent chat bots and have deployed
some eye-catching examples:
WeChat
If you want insight into the greatest adoption of bots, you need to look at WeChat,
a messaging and call platform with 650 million active users that’s become many
consumers’ primary means of connecting to a wide range of online and digital
services.
Millions of companies are present on WeChat and banks are right in the thick of it:
Bank of China, China Construction Bank, and China Merchants Bank are just three of
the many banks that have deployed chat bots on WeChat.
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Alexa
In March, Amazon and Capital One announced that customers can now pay their bills just by
talking to a bot running on Alexa, Amazon’s intelligent personal assistant on its Echo device.
Source: https://www.capitalone.com
Erica
At Money2020, Bank of America unveiled Erica, a smart chat bot that’s coming in “late 2017.”
Erica is said to make use of AI, predictive analytics and cognitive messaging that will help
customers make payments, check their balances and even offer advice on saving money and
reducing debt by directing users toward educational videos and articles.
MasterCard’s Facebook Messenger bot
MasterCard Labs partnered with Kasisto, makers of “conversational AI platform” KAI to
create a bot for banks that will launch next year, providing a way for consumers to shop and
transact in Facebook Messenger, and pay using MasterPass.
Source: http://www.mastercard.com
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PayPal’s Facebook Messenger bot
In the US, Facebook is rolling out a native payment solution that will allow third party
merchants to accept PayPal payments in their Facebook Messenger bots. Customers will be
able to make payments in Messenger, link their PayPal accounts to their Facebook accounts
and receive receipts via Messenger.
As an early pilot of this capability, PayPal’s Braintree partnered with Facebook and Uber in
December 2015 to allow users to hail and pay for an Uber ride from Messenger.
Lakshmi
Bots aren’t just virtual; India’s City Union Bank is trialling Lakshmi, a robot for handling
customer enquiries inside branches. If the robot proves popular the company plans to
install it in as many as 30 branches.vii
Source: YouTube
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Growing pains
Do banking customers actually want bots?
Banks have many reasons to love the idea of bots but do customers want them?
“Though many banks have bots with some level of
artificial intelligence, the customer experience has not
always been great.”
- Daniel Latimore, Senior Vice President of Celent’s banking practice
One of the key obstacles to acceptance that banks need to overcome is that the
current generation of chat bots often disappoints:
• Bots can frustrate customers by failing to set expectations or by acting in
unexpected ways. As Forrester analyst Peter Wannemacher notes that’s
not a problem if you’re just ordering a taco but “the stakes are too high
when it comes to actions and advice related to people’s money.”viii
• For all its intelligence AI still can’t empathise or understand emotions –
bots can’t hear a customer’s frustration.
There are some broader issues of trust to consider too.
There are genuine fears that AI could lead to mass unemployment among the semiskilled labour force. According to Professor Moshe Vardi of Rice University, robots
will have taken over most jobs within 30 years leaving humanity facing its ‘biggest
challenge ever’ to find meaning in life when work is no longer necessary.
“...the number of branches and people employed in the
financial services sector may decline by as much as 50%
over the next 10 years”
- Antony Jenkins, former CEO of Barclays
It’s possible that by the time banks develop bots that are good enough to replace
human staff they’ll have customers who don’t want them (a survey by Sky News
revealed that more than six out of ten people in the UK think the Government should
step in to protect jobsix).
There is also the possibility that as bots get closer to mimicking humans they’ll
actually become less appealing to us, a phenomenon known as the ‘uncanny valley’.
Whether customers want or accept bots will probably come down to trust and whilst
it’s unlikely that AI is going to start experiencing feelings any time soon, the Turing
test teaches us that it doesn’t have to, but it will need to learn how to fake them.
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Will AI be given time to learn?
The strength of AI comes from its ability to learn and some gremlins can be addressed
through practice – robots can learn colloquialisms and spot spelling mistakes and
poor grammar, by watching humans’ process enquiries, for example.
The need for this kind of training could create a catch-22 situation though: customers
will want to deal with bots that have already learned most of what they need to know but bots can’t learn what they need to know unless they can deal with customers.
There are risks to letting bots learn in public too, as Microsoft learned when it had to
withdraw its fake millennial Twitter bot ‘Tay’ after just 16 hours! She learned the wrong
things from the wrong people and embarked on a tirade of offensive, profanity-laden
racist and sexists tweets.
Until financial services organisations have trained their bots sufficiently they may have
to incentivise users or have human staff on hand, ready to step in and take over.
A few banks are currently walking their infant AIs through their first steps:
• Atom Bank is tinkering with a robot that answers correctly about 65% of the
time (put another way, the robot gets 7 out of 20 answers wrong.) The bank
intends to keep it under wraps until it’s at least 85% accurate.
• Having completed a pilot among RBS staff the bank’s new bot “Luvo” is
ready to start helping customers. In the beginning Luvo could answer
just 20 questions and was only right 10% of the time. After a few months
of training its ability improved markedly and it’s now able to tackle 400
questions and is right about 90% of the timex.
Will bots make banks invisible?
In the not-too-distant future banking and banks themselves could become invisible to
the customer.
Digital assistants like Apple’s Siri, Google’s Assist and Amazon Echo offer new ways to
reach customers but their interfaces put a veil between banks and their customers.
Banks must be wary of the potential cost to their brand.
And even if we communicate with our banks directly on messenger, or some other
chat interface, we won’t be talking to our bank’s branch staff, call centres or sales reps
and the bank’s footprint will be no more than a logo presented on somebody else’s
platform.
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First steps
Financial institutions have to go to their customers or risk losing out to competitors
who will. Cyberspace is the new high street and being present means being on the
web, on smartphones and, increasingly, on messaging apps.
Organisations aiming to survive digital disruption need a plan for how they will
engage with customers through conversational channels such as WhatsApp and
Facebook messenger, and how they will scale to provide a service to users expecting
an instant response.
Chat bot technology is still developing but is mature enough to be used in real world
applications. Now is the time to figure out how to leverage the technology to engage
and serve your customers.
In doing so, you should:
1. Focus on narrow use cases
Start simple – identify narrow, well defined niches (RBS’s Luvo has started
on SME Banking) and expand from there. Be ready to learn; identify what
works, what consumers want, how they ask questions and how they feel
about dealing with AI.
2. Start with messaging
Start with existing messaging or conversational processes such as FAQs,
2-way SMS or Live Chat and evolve into the more difficult area of chat
bots when you have a firmer footing. Some banks are starting to test bots
instead of traditional linear online application forms.
3. Use humans as a backup
Ensure humans are in place to quickly take over chats within the context
of the conversation or previous customer engagements so that mistakes
can be corrected immediately.
4. Support real-time info and actions with backend data
Chat bots, along with virtual assistants and other digital services, are far
more effective when they have access to real-time data and systems of
insight.
5. Embrace APIs
Banks that recognise the value of APIs (Application Programming
Interfaces) will be in a better position to draw in new data sets and thirdparty functionality and adapt to shifts in the chat bot and messaging
landscape.
6. Don’t try to be human
Bots aren’t yet close to being human-like and pretending they are will set
expectations you can’t deliver on. Focus instead on what bots are good at,
as Phil Libin the co-founder and former CEO of Evernote put it: “Think less
Turing test and more R2D2. Bots don’t have to pretend to be human; they
just have to be fast and effortless.”
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Are bots ready to be bankers?
In small numbers, on messaging apps and digital assistants, bots are already
bankers. Their number is growing and whilst their success is not assured Moore’s
Law and the commodification of Artificial Intelligence technology make it more likely
than not.
Machine learning will allow banks and financial services companies to cut costs and
scale up to offer customers a personalised and always-on service wherever they are.
Chat bots will never be a standalone solution to business challenges; rather a part of
a company’s larger portfolio of digital touchpoints.
Just as banks adapted to technological shifts by making themselves available over
the phone, on the internet and on our smartphones, they must now add chat and
messaging to their omni-channel strategies.
The bots are ready, are you?
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References
i.
http://www.gartner.com/newsroom/id/3143718
ii.
http://techemergence.com/valuing-the-artificial-intelligence-market-2016-and-beyond/
iii.
http://www.idc.com/getdoc.jsp?containerId=prUS41878616
iv.
http://www.wired.co.uk/article/twitter-bots-democracy-usa-election
v.
http://gizmodo.com/how-ashley-madison-hid-its-fembot-con-from-users-and-in-1728410265
vi.
http://uk.businessinsider.com/statistics-on-companies-that-use-ai-bots-in-private-and-directmessaging-2016-5
vii. http://www.bankingtech.com/641772/lakshmi-indias-first-banking-robot-unveiled-by-city-unionbank/
viii. https://www.finextra.com/newsarticle/29383/banks-should-back-off-from-clunky-chat-bots--forrester
ix.
http://news.sky.com/story/robot-revolution-40-fear-wipeout-by-machines-10347791
x.
https://www.be-itresourcing.com/blog-news/view/3170/fintech-robotics-banking-bad-languageand-the-future-of-jobs.aspx
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About the Author
Simon Cadbury, Director of Strategy & Innovation
Intelligent Environments
Simon is a product marketer and strategist with 18 years’ experience
working for a range of major international brands.
Simon’s role is to work with Intelligent Environments’ investors
to set and deliver the company’s mid and long term strategy, as
well as overall responsibility for the product development and
management of Interact; the company’s core product offering.
Simon joined in 2013 from Lloyds Banking Group where he was
responsible for payment technology and also sat on the Credit Card divisions leadership
team.
Prior to this he worked on the launch of a number of firsts in new technology – the
Blackberry (BT Cellnet), BT Openzone (BT Retail), 3G Live! (Vodafone Australia) and Sky HD
(BSKYB).
About Intelligent Environments
Intelligent Environments is an international provider of innovative mobile and online
solutions for financial services providers. Our mission is to enable our clients to always stay
close to their own customers.
We do this through Interact®, our single software platform, which enables secure customer
acquisition, engagement, transactions and servicing across any mobile and online channel
and device. Today these are predominantly focused on smartphones, PCs and tablets.
However Interact® will support other devices, if and when they become mainstream.
We provide a more viable option to internally developed technology, enabling our clients
with a fast route to market whilst providing the expertise to manage the complexity of
multiple channels, devices and operating systems. Interact® is a continuously evolving
technology that ensures our clients keep pace with the fast moving digital landscape.
We are immensely proud of our achievements, in relation to our innovation, our thought
leadership, our industry wide recognition, our demonstrable product differentiation, the
diversity of our client base, and the calibre of our partners.
For many years we have been the digital heart of a diverse range of financial services
providers including Atom Bank, Generali Wealth Management, HRG, Ikano Retail Finance,
Lloyds Banking Group and Think Money Group.
For further information visit www.intelligentenvironments.com
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